Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Bank Bradesco SA (NYSE:BBD) reported a recurring net income of almost 5.9 billion, marking a growth of over 39% year-on-year and 8.6% quarter-on-quarter. The bank's total revenue reached $32 billion, with a 15% year-on-year growth, driven by a 13.7% increase in net interest income and a 32.7% rise in insurance revenue. The loan portfolio expanded by 12.9% year-on-year, with significant growth in micro, small, and medium-sized enterprises, which grew almost 30% year-on-year. The insurance group showed strong performance with a ROAE of 22.4% and a 25.3% year-on-year revenue growth, contributing significantly to the bank's overall results. Bank Bradesco SA (NYSE:BBD) has been investing in technology and digital channels, improving productivity and client engagement, which supports its growth strategy.

Negative Points

The bank's cost of risk is above the cost of equity, indicating potential challenges in maintaining profitability. There is a concern about the sustainability of the current growth rate, especially with the expectation of slower growth in the second half of the year. The bank's mass retail segment is still a detractor of profitability, with a need to adjust the cost to serve these clients. Despite the strong performance, the bank's efficiency ratio remains high at 49.7%, with significant improvements not expected until 2026. The macroeconomic environment, including high inflation and interest rates, poses risks to the bank's growth and profitability in the coming quarters.

Q & A Highlights

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Q: What are the main segments where Bradesco sees room to improve ROAE? A: Casiano Scarpelli, CFO, explained that the main area for improvement is mass retail, where the cost to serve is being corrected over time. The wholesale bank and high-income segments already have high returns, and improvements in productivity and cost management in mass retail will help enhance ROAE.

Q: How does Bradesco view the opportunity in private payroll deductible loans? A: CEO Octavio de Lazari Jr. stated that Bradesco sees significant growth potential in private payroll deductible loans, where their market share is currently lower compared to public payroll loans. The bank plans to adopt a more aggressive strategy to capture this opportunity.

Q: Can Bradesco sustain the growth and claim rate improvements in its insurance group? A: Andre Cano, Executive Vice President, noted that the insurance group's growth is sustainable due to investments in improving claim rates, particularly in health insurance. The group expects continued traction in sales and a downward trend in claim rates.

Story Continues

Q: What is Bradesco's outlook on loan portfolio growth given the macroeconomic environment? A: CEO Octavio de Lazari Jr. emphasized a moderate risk appetite, focusing on secured loans and payroll deductible loans. Despite potential slower economic growth, Bradesco sees opportunities in these areas and remains confident in maintaining quality and growth.

Q: How does Bradesco plan to address the cost to serve in mass retail? A: Casiano Scarpelli, CFO, mentioned that Bradesco is working on a new value proposition for mass retail, focusing on digital transformation and optimizing the cost to serve. This includes reducing the physical footprint and enhancing digital service offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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